Business World

Sunday 19 November 2017

Christmas tree growers in Denmark are needled by price fixing probe

The Danish Christmas Tree Growers' Association, whose members are Europe's biggest exporters of holiday greenery, were accused by national authorities of attempting to rig prices.

The charges follow a police investigation, stemming from a complaint filed last year by the Danish Competition Authority, deputy state prosecutor Hans Jakob Folker said.

"The association has been charged with instructing its members over a four-year period what prices they should charge for their Christmas trees," MrFolker said.

Prices of Denmark's Nordmann firs, coveted for their long-lasting, soft needles, have risen 25pc this season as fewer farms grow them and east Europeans import more trees, Kaj Oestergaard, the association's director, said this month.

Danish newspaper 'Jyllands-Posten' cited him yesterday as saying the association held meetings to advise farmers on how to set prices.

"I have absolutely no comment," Mr Oestergaard said. "I regret the comments I made to the other media."

Slump

This year's price jump represents the biggest gain in 15 years, Oestergaard said earlier this month. Tree farmers cut back on planting almost a decade ago, when a glut caused prices to slump, leading to a dearth of trees today, he said.

At the same time, demand has risen in eastern Europe, where consumers are buying higher-quality imported Christmas trees as economic growth fuels spending, according to Claus Jerram Christensen, a senior consultant with the association.

"In any trade, people with large interests, they talk to each other, said Arne Joergensen, a grower of Christmas trees on the northern Danish island of Zealand.

MrJoergensen, who is not a member of the growers' association, says it's "unfair that they negotiate prices".

The "big producers are sitting on top of the entire market", Mr Joergensen said. "You can say boo to them but you won't scare them."

Both the association and Oestergaard are being charged in the case, Jens Madsen, a lawyer representing the police, said.

The association provides historical price statistics and recommends raising prices in the magazine it publishes, Mr Madsen said.

"They also have arranged meetings with the intention of preventing members from undercutting each other on prices," he said. "This is a clear infringement of competition law."

Fines

While Mr Madsen declined to comment on the size of a possible fine, Frederik Bork, head of the industry, transport and energy division of Denmark's Competition Authority, said "minor" fines can be as high as 400,000 kroner (€53,775), while "major" fines can be as high as 15 million kroner.

Each year, Denmark's 4,000 farmers produce about 12 million trees and export about 10 million, generating annual sales of 1.4 billion kroner (€1.9bn), according to the association.

The country sends almost half its trees to Germany. The UK and the Netherlands are the next-biggest markets.

The number of farmers has fallen about 15pc since the European Union stopped subsidising the industry in 2005.

German tree distributors are also charging more, said Stephan Gutzweiler (43), a spokesman for the forestry department of the regional government of Freiburg, on the edge of the Black Forest in southwest Germany. (Bloomberg)

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